Bank of England sits tight and holds interest rates at 0.5%

The Bank of England’s Monetary Policy Committee (MPC) has voted eight to one in favour of keeping interest rates at their historic low of 0.5%.

Once again Ian McCafferty, was the lone MPC member voting for a rate rise.

The cost of borrowing has now been at its current level since March 2009

Maike Currie, investment director for personal investing at Fidelity International, said: “Today we got the first indication of the Bank of England’s thinking and it seems the Old Lady is adopting a decidedly dovish stance with only one member of the MPC voting in favour of a rise.

“Slowing wage growth and benign inflation expectations mean there is very little pressure for the Bank to act anytime soon and it is entirely possible that interest rates will remain at 0.5% all year.”

While weaker sterling should lift inflation and ease concerns that a UK rate rise could push the pound higher, the Bank of England is maintaining a cautious stance given a deluge of economic headwinds including emerging market turmoil and a continued collapse in the oil price.